Wow! Chancellor George Osborne delivered his first Budget without having to worry about coalition partners on 8th July. We knew there would be further announcements regarding pensions and the well-publicised plan to allow you to pass on the family home, as long as it is worth less than £1 million, to the next generation. But nobody predicted what actually happened.

Committed not to raise the standard rates of income tax and VAT, the Chancellor wanted to give some money away, which meant that he needed to raise at least an equivalent amount from other sources. He chose options that none of us saw coming and it seemed to be the small business owner that was the principal target for his attack.

Burden on small businesses
One of the ways that the Chancellor has decided to attack the level of benefits that the government is paying is to encourage the lower-paid into work. His latest idea is to increase the burden on small businesses by insisting that everyone is paid a living, rather than a minimum, wage. Admittedly it will be phased in over the next 5 years, but I have been approached already by small business owners worried about whether they will be able to afford the additional costs. They are a resilient bunch – hopefully they will find a way.

The second element of his approach to encouraging people into work is to ensure that those on lower wages keep as much of their wages as they possibly can by increasing everyone’s personal allowance. But business owners, who pay themselves a dividend out of their profits, will now pay substantially more tax on those dividends.

Most owner-managers will be rather unhappy with George’s latest offerings
The Chancellor has long faced a dilemma about how to discourage buy-to-let purchasers from buying up the housing stock that he would like to see in the hands of first-time buyers. In a surprise move he opted to restrict tax relief on mortgage interest for buy-to-let owners.

Insurance Premium Tax increased from 6% to 9.5%. Surely this isn’t an indication that he will eventually charge VAT on insurance premiums, is it? Hopefully not, because it will affect all of us. Have you ever added up how many different insurance payments you make every year?

There was a little bit of good news for businesses with a small reduction in the rate of Corporation Tax, an extension of the tax relief for equipment purchases and a 50% increase in the national insurance rebate. I can’t help feeling though that most owner-managers will be rather unhappy with George’s latest offering.